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This Miracle Fuel Has a Few Problems

In the space of an hour on a recent evening, a couple dozen cars refilled their gas tanks at a Valero service station just off the Redwood Highway in Mill Valley, a northbound stop on the way into California’s Marin County. During that time, the only pumping station that sat mostly unused was the cobalt blue one supplying hydrogen fuel. The hydrogen pump received only three visitors: two of the 3,800 hydrogen-powered sedans on California’s roads, each looking for a quick fill-up, and one old station wagon that parked there for a few minutes. An attendant who’s worked at the Valero for three years says that’s a pretty busy day for the hydrogen pump, which usually fuels one car per hour.

That’s not much of a return on the roughly $100 million California has spent over the past several years to build fueling stations for hydrogen vehicles. Each of the 31 hydrogen pumps around the state cost at least $2.5 million and was heavily subsidized with funds from the public and from Toyota Motor Corp., Honda Motor Co., and other automakers. Demand, however, remains so low that even with subsidies, they aren’t busy enough to turn a profit. (A typical fill-up costs customers about $45, but that’s heavily subsidized, and most lessors cover fuel costs.)

At Governor Jerry Brown’s direction, the state is spending more than $2.5 billion in clean energy funds to accelerate sales of hydrogen and battery vehicles. That includes $900 million earmarked to complete 200 hydrogen stations and 250,000 charging stations by 2025. A larger hydrogen network will help make the market more sustainable, the thinking goes—part of a kitchen sink approach to reducing carbon emissions alongside electric cars. Brown’s office referred requests for comment to the California Energy Commission, which said in a statement that the governor aims to have 5 million zero-emission vehicles on state roads by 2030, and that hydrogen is a part of that calculus.

The question is whether the money would be better spent on charging stations and other support for the state’s 360,000 plug-in electric vehicles. “There are still some kinks to work out,” says Joe Gagliano, infrastructure development manager at the California Fuel Cell Partnership, a group of state agencies and hydrogen proponents. “Hydrogen is coming out of left field for most consumers.”

So far, California is the only place in North America where drivers can buy a fuel cell vehicle and have some confidence they can get it refueled. “Competition is pretty scarce right now,” says Shane Stephens, chief development officer of FirstElement Fuel Inc., which built 16 of California’s 31 stations with $28 million in state grants. Most of the existing single-pump stations can fill 50 tanks to 60 tanks a day. Sometimes there’s a wait at the pumps, but mostly the nozzles hang limp, devoid of cars to feed.

On the occasions when two or more cars line up to fill at the same time, the second car typically has to wait an extra few minutes after the first car is done, because gas pumped under high pressure begins to freeze a single pump’s nipple, condensing moisture from the air into ice. Several newer, two-pump stations have helped address this problem, but California still needs more trucks to deliver supplies of hydrogen for the stations. (The state is subsidizing the refills for eight years.)

For decades, hydrogen advocates have called the Earth’s most abundant element the future of clean energy. But the occasional pilot programs around the world and those fueling stations in California have consistently failed to find traction, typically because of high costs and limited usability. Meanwhile, plug-in electrics have leapt ahead, thanks to Elon Musk and swift declines in lithium ion battery costs. California’s network of public charging stations now tops 14,000, well beyond the 9,000 gas stations that power the state’s roughly 25 million fossil fuel vehicles.

Stephens says the gap is beginning to narrow, if slightly. With continued government support, he says, FirstElement will be profitable in a couple of years and won’t need subsidies a decade from now. “We’re seeing uptake accelerate,” he says. Gagliano, who drives a hydrogen car himself, says that once people master the learning curve, they’ll appreciate hydrogen cars’ longer range (400 miles, compared with 300 for a typical Tesla) and shorter fill-up time (about four minutes, vs. at least a half-hour for the fastest battery-charging stations). “Filling up your first time is a little intimidating, but after that it’s no different than a gas pump,” Gagliano says.

Jim Collins, an investor who commutes to San Francisco from Tiburon in a hydrogen-powered Honda Clarity, says there are enough stations in the Bay Area to keep his car’s fuel cell running on the local trips he needs, but he wouldn’t have leased it if the state hadn’t put up $5,000 to lower the $400-a-month lease and kept subsidizing the fuel. Even brief disruptions of the refueling network, he says, can be a serious problem. When a station wasn’t working a week earlier, he switched to driving an old Saab. “This technology obviously isn’t ready for prime time,” he says.

California’s hydrogen power advocates say the next phase of the state’s fuel pump development will remain an early step along a path that’s likely to take decades. “We understand the skeptics,” Gagliano says. “What we’re doing now is just the tip of the spear. This is about getting to zero emissions by 2050.” But there’s little to suggest that consumers will be satisfied with similar standards 30 years from now, says Claire Curry, a technology analyst for Bloomberg New Energy Finance. “I’m skeptical,” she says. “I’d be surprised if we aren’t all getting around in a battery electric by then.”

BOTTOM LINE – Governor Brown has earmarked millions more dollars of state funds to subsidize hydrogen pump installations and refills. That may not be the easiest way to cut carbon emissions.